COMPONENTS OF ORGANIZATIONAL CAPACITY CAPACITY IS AN ABSTRACT TERM

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Components of Organizational Capacity

Components of Organizational Capacity


Capacity is an abstract term that describes a wide range of capabilities, knowledge, and resources that nonprofits need in order to be effective. What makes an organization effective? According to Grantmakers for Effective Organizations, it is “the rededication to achieving results.”1 Organizational capacity is multi-faceted and continually evolving.


Six components of organizational capacity are necessary for high performance: governance and leadership; mission, vision, and strategy; program delivery and impact; strategic relationships; resource development; and internal operations and management. These interdependent factors all contribute to the health and performance of a nonprofit organization.


Governance and Leadership: The organization’s board of directors is engaged and representative, with defined governance practices. The board effectively oversees the policies, programs, and organizational operations including review of achievement of strategic goals, financial status, and executive director performance. The organization is accomplished at recruiting, developing, and retaining capable staff and technical resources. The organization’s leadership is alert to changing community needs and realities.


Mission, Vision, and Strategy: The organization has a vital mission and a clear understanding of its identity. It is actively involved in regular, results-oriented, strategic, and self-reflective thinking and planning that aligns strategies with the mission and organizational capacity. The planning process involves stakeholders in an ongoing dialogue that ensures that the organization’s mission and programs are valuable to the neighborhood or constituency it serves.


Program Delivery and Impact: The organization operates programs that demonstrate tangible outcomes commensurate with the resources invested. Programs are high quality and well regarded. The organization utilizes program evaluation results to inform its strategic goals. The organization has formal mechanisms for assessing internal and external factors that affect achievement of goals.


Strategic Relationships: The organization is a respected and active participant and leader in the community, and maintains strong connections with its constituents. It participates in strategic alliances and partnerships that significantly advance their goals and expand their influence.


Resource Development: The organization successfully secures support from a variety of sources to ensure that the organization’s revenues are diversified, stable, and sufficient for the mission and goals. The resource development plan is aligned with the mission, long-term goals, and strategic direction. The organization has high visibility with key stakeholders, and links clear, strategic messages to its resource development efforts.


Internal Operations and Management: The organization has efficient and effective operations, and strong management support systems. Financial operations are responsibly managed and reflect sound accounting principles. The organization utilizes information effectively for organizational and project management purposes. Asset, risk, and technology management are strong and appropriate to the organization’s purpose.2


Mission, vision, and strategy are the driving forces that give the organization its purpose and direction. Program delivery and impact are the nonprofits’s primary reasons for existence, just as profit is a primary aim for many for-profit companies. Strategic relationships, resource development, and internal operations and management are all necessary mechanisms to achieve the organization’s ends. Absent any one of them, an organization flounders or does not reach its full potential. Leadership and governance is the lubricant that keeps all parts aligned and moving. The model also suggests the need for constant feedback from the external environment, and routine monitoring of program audience and outcomes to inform mission and strategy. When assessing the capacity of nonprofit organizations, it is best to examine each element separately, in relation to others, and within the organization’s overall context.


A variety of factors can influence an organization’s needs at any time, including:


Organizational Assessment Resources


BoardSource: Board Self-Assessment tool

This full–board self-evaluation questionnaire enables board members to examine and improve board performance. The instrument is based on research related to key characteristics of effective boards. www.boasdsource.org


Development Training Institute: Leadership Self-Assessment Tool

Competency assessment for community development organizations covering management and financial areas.

http://www.dtinational.org/training/tools/assess.asp


Drucker Foundation: Self-Assessment Tool

This participant workbook and process guide help nonprofits address four questions: Should the mission be revised? Who is the primary customer? What are our results? What does the customer value? www.pfdf.org/leaderbooks


Harvard Business School: The Balanced Scorecard

Developed by Harvard Business School professor Robert Kaplan, the Balanced Scorecard incorporates performance measurements not only related to finances, but also to how constituent needs are being met and how a nonprofit organization is delivering on its mission. www.hbsp.harvard.edu


InnoNet: Self-Assessment Instrument

Offers comparative analysis of assessment tools and their use for different subject areas and groups. Field-tested. Online at http://www.innonet.org/resources


The Management Center: Nonprofit Assessment Tool

Eight-part, 80-itm, online assessment tool intended to help organizations measure their capacity and performance in administration and leadership, board of directors, community relations and marketing, finance, human resources, planning, program, and plant and equipment. http://www.tmcenter.org


Maryland Association of Nonprofits: Standard of Excellence

Enables peer reviewers to measure performance for standards related to mission and program, governance, human resources, financial and legal, fundraising, and public affairs. www.mdnonprofit.org


National Civic League: The Civic Index

A twelve part self-assessment tool to help communities evaluate and improve their civic infrastructure—the interplay of people and groups through which decisions are made and problems are resolved at the community level. www.ncl.org/publications


The Nature Conservancy: Resources to Success

Designed for non-governmental organizations, this organizational assessment tool provides indicators for eight categories of nonprofit functioning. The booklet includes guidance on how to conduct an organizational self-assessment. [email protected]


Neighborhood Progress, Inc.: Mapping the Road to Excellence: Operating Guidelines for Community Development Corporations

Assessment tool covering legal, financial and budgeting, human resources, governance, planning, IT, communications, and program management areas. Available in distance learning program. www.neighborhoodprogress.com


Venture Philanthropy Partners: Effective Capacity Building in Nonprofit Organizations

McKinsey & Company developed the Capacity Assessment Grid as a self-assessment or consultant-led assessment tool, to be used in conjunction with their capacity framework. www.venturephilanthropypartners.org/usr_doc/full_rpt.pdf or 703/620-8971


Wilder Center for Communities: Organizational Assessment Guides and Measures

Includes performance standards for community development corporations for the six components of organizational capacity referred to in this book. 651/642-2083



1 Report form 2000 GEN-GEO Conference. (Grantmakers Evaluation Network and Grantmakers for Effective Organizations, 2000) p.2.

2Adapted from Fate, P. and Hoskins, L., “Organizational Assessment Guides and Measures”, Wilder Center for Communities (2001). Some of these components are derived from N. Glickman, and L. Servon, “More than Bricks and Sticks: Five Components of Community Development Corporations’ Capacity,” Housing Policy Debate 9 (1998) 497-539.

Excerpt from Building to Last: A Funder’s Guide to Capacity Building. A work in progress by Paul Connolly of The Conservation Company and Carol Lukas of Amherst H. Wilder Foundation. © 2002 Amherst H. Wilder Foundation.



Excerpt from Building to Last: A Funder’s Guide to Capacity Building. A work in progress by Paul Connolly of The Conservation Company and Carol Lukas of Amherst H. Wilder Foundation. © 2002 Amherst H. Wilder Foundation


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